The Paris Stock Exchange opened higher at the start of the first full week of the third quarter. However, the day promises to be especially calm due to the closure of US markets on Independence Day.
At 9:10 am Bedroom 40 added 0.80% to 5,978.25 points.
The next few days will be full of leading indicators, including Wednesday’s release of the minutes of the Fed’s monetary policy committee meeting last month, as well as the June US jobs report. But before that, investors at the end of the morning will take into account the dynamics of producer prices in the euro area in May. The consensus established by Bloomberg sees growth slowing to 36.6% for the year from 37.2% in April.
From recession to inflation
Signs of an economic downturn are multiplying in the United States, as they are elsewhere, and now they appear in all statistics, whether it be consumer spending or industrial activity. Thus, the prospect of a recession prevails over the only concerns about inflation. Market psychology switched sharply from inflationary to strongly growth-oriented sentiment “Summarizes Chris Weston, head of research at Pepperstone Group, quoted by Bloomberg. He adds that the risk now is that the Fed will be too slow to reverse the upward trend in rates.
The market estimates an 85% chance of a 75 basis point increase in the federal funds rate at the end of the month and a 3.25% to 3.5% value of money at the end of the month. It is also counting on a policy of cutting interest rates in 2023 and 2024 amid growing recession risks, NAB economists stress.
The Atlanta Fed’s GDPNow Forecast Growth Outlook Study forecasts US GDP growth to contract 2.1% year-on-year in the second quarter, suggesting the economy is on track to transition into a technical recession after declining 1.6% in the first three month of the year.
Banks targeted by the ECB
In China, a county near Shanghai is facing a Covid-19 outbreak that threatens the Jiangzu Delta region, a critical region of the country’s economy. The surge poses a risk to the supply chain of solar panels, medicines and microchips, and is a test of Beijing’s zero Covid policy through massive testing and lockdowns.
Closer to home, the European Central Bank is considering how to stop eurozone banks from profiting too much on subsidized loans they have largely taken advantage of during the pandemic as it prepares to raise interest rates, reports Financial Times.
Chief proponent of Cac 40, Total Energy rose by 3%, and a barrel of Brent added a few points to 111.74 dollars.
Technip Energy rises by 2.8%. An oil service group has won an engineering, equipment and construction contract with Hafslund Oslo Celsio for a carbon capture and storage project associated with a waste-to-energy plant in Oslo, Norway. The contract amount is from 250 to 500 million euros.
Orpea wins 3.9%. The nursing home operator has announced a major upgrade to its board of directors, with the intention of appointing former SNCF CEO Guillaume Pepy as chairman.
Elior rose by 1.9%. Collective Nutrition Group announced that its board of directors has decided to combine the functions of president and CEO and has unanimously decided to entrust Bernard Gault with the position of CEO.